Canada

Canada

Ontario rejects renewables law

1 March 1999

Hopes for a more secure future in Ontario's coming liberal electricity market were dashed for renewables advocates after the provincial Market Design Committee (MDC) issued its final report, offering no new support for the development of green power. The MDC failed to achieve consensus on a proposal to require retailers to buy a specified proportion of their energy from renewable resources.

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Hopes for a more secure future in Ontario's coming liberal electricity market were dashed for renewables advocates after the provincial Market Design Committee (MDC) issued its final, mammoth report last month, offering no new support for the development of green power. The MDC failed to achieve consensus on a proposal to require retailers to buy a specified proportion of their energy from renewable resources. If passed, the mechanism for creating a protected market for renewables would have been similar to the "Renewable Portfolio Standard" adopted by a series of states in the US. "We're quite disappointed," says Christine Elwell of the Sierra Club of Canada.

The 1135 page report, which defines the rules for a competitive market for the year 2000, was, however, welcomed cautiously by independent power producers. "This represents a milestone in Ontario. But of course, more needs to be done," says Jake Brooks of the Independent Power Producers' Society of Ontario. "The important thing is that we've gone beyond the stage of abstractions and we're working on implementation questions."

Still monopolising

The MDC's work was complicated from the outset by the provincial government's unwillingness to break up Ontario Hydro's generating company, regarded by many as the only way to ensure true competition among suppliers. The MDC thus produced only a "second-best" solution in its agreement with Ontario Hydro, according to Tom Adams of the MDC. The new generating company, or "genco," formed to take over Ontario Hydro's generating stations, will have control of 80% of the market, Adams says.

In addition, the genco will be able to dictate pricing in the market, claims Arthur Dickinson of the Association of Major Power Consumers' of Ontario. Independent generators will have a difficult time competing with the suggested price cap of C$0.038/kWh, he says, calling the MDC's new market rules "an administrative nightmare."

"Can you imagine how difficult it is going to be to operate this market when you've got these caps and rebates and all sorts of other nonsense?" asks Dickinson. "There are still a lot of issues that have to be resolved before we'll see a healthy competitive market place. Once this market opens, it will become clear-quickly-that all is not well."

The MDC report is now subject to approval by the Ontario government. Further rules and regulations will be created by two market operator agencies and the new Ontario Energy Board, which will be asked "to pay particular attention to the MDC's advice," says Ontario energy minister Jim Wilson.